The Doval Point of View On Three Years of Modi’s Government

Doval feels that even mild expectations of the Modi government have been disappointing.

6 min read

Rarely in the history of think tanks in India has one had four serving ministers on board. But then, India Foundation is no ordinary think tank.

Led by Shaurya Doval, son of National Security Advisor Ajit Doval, this relatively young policy institute also boasts of the BJP National General Secretary, Ram Madhav, as a director and describes itself as one that “seeks to articulate Indian nationalistic perspective on issues”.

Little more evidence is needed to recognise that of all the advocacy groups in Delhi, this one probably has the ear of the government. Or at least the best chance of it.

Doval wears that proximity lightly. In an interview, on the sidelines of the IDFC Institute Dialogues 2017 conference, Doval describes the foundation as a “modest attempt”. Though news articles will have you believe otherwise.

Nonetheless, Doval can read this government better than most. As the Narendra Modi government comes close to completing three years in power, Doval talks to BloombergQuint about the hits and misses.

  • Less government, more governance
  • Reforming the bureaucracy
  • Bad loans
  • Employment

Less Government, More Governance?

Doval insists the ‘more governance’ promise has been fulfilled, and that less government, if interpreted to mean fewer ministers and a leaner bureaucracy, could be too disruptive.

Where it could have done more is in terms of administrative lookout of how many number of government employees or political appointees are there. I think that’s a more structural change, that’s going to take a bit of time. It concerns livelihood, architectural changes, in terms of how we go about doing it.
It could be very disruptive. But I think, by and large, while keeping the view on better governance – which is even more important as a matter of fact – I think when you look at better governance and less government, let’s not be confused that it’s better governance that we are after. If better governance came at the cost of more government, that would have also been fine.

When asked why the government won’t exit businesses, Doval launches into a lengthy explanation.

One fundamental reason is that in the interim period of ten years, because of the myriad number of legislative and complex procedures and litigation that started with the first regime of disinvestment, it created an environment where disinvestment became fraught with much legal and judicial process including, how do you fix valuations, how do you fix price, what is a national asset?
Everybody thought every asset that you sell to the government of India is a platinum assets and therefore, any government that does sell is actually transacting in terms of crony capitalism. So you must understand that in the last ten years this whole disinvestment got slotted in a box from where any tinkering would have unleashed a complete box of worms, where nothing substantive would have achieved  
Point number two is that in terms of the assets that the government actually holds, in substantive terms there is not much difference that is going to be made to the ex-chequer. Disinvestment looks like great headline news but really where we are today in the asset cycle around the world nobody is going to pay huge premiums and huge prices.
Thirdly, I think we should use this time, which the government is trying to do, to come to a philosophical and a settled issue as to how and what we are going to keep as assets in the public sector domain, which is important. And there are certain assets that cannot be privatised. You know we talked about this whole Jan Dhan, the opening of bank accounts. Much of this was done by the PSU banks.
Private sector banks’ portion of this was very low. So the question is that in a poor country would you want to keep the banking system completely in private banks or do PSU banks still have a role?”

In January 2016, the government announced a Startup India Action Plan, of which one program was to set up a Rs 10,000 crore Fund of Funds for Startups in partnership with SIDBI. Government data suggests over Rs 800 crore have been committed so far to various funds. Doesn’t this further involvement of government in private enterprise contradict it’s promise of less government?

Doval argues that in the face of few “innovation centres in universities” and “little private sector appetite” to fund startups it was upto the government to put risk capital to work and fund startups that can “solve many many of India’s problems, both of scale and size that don’t exist anywhere else in the world”.

It’s not as if the government’s given a lot of money in all due sense. But it has started this culture of getting people to innovate in universities. So, if our corporates won’t do it, the foreign investors won’t do it, then you know, somebody has to do something. It would be great if the private sector in India stood up, if many industrialists who sit in India and who’ve got these multibillion dollar homes were to stand up and put up their hands, nobody’s stopping them in saying “we’re going to start 10 labs across the country.”  
That would have been a very welcome development. But because we are a country today where we can’t do that, ask our businesses, where we can’t ask anybody, so then the government also has to pitch in.

Reforming The Bureaucracy

People had great hopes from Prime Minister Narendra Modi that he would take on the rotten system of governance and reform the bureaucracy. Nobody expected him to uproot the whole structure, of course, but there was hope that some administrative reforms will be injected into the sclerotic system. But even such mild expectations have been met with disappointment.
An exceprt from an opinion piece in Swarajyamag
It’s not that the government has not tried to tinker (but that’s all they have done). Some ministers have tried to get young talented people to work for them in limited capacities. But even this has been repeatedly stonewalled by the entrenched babudom.
An exceprt from an opinion piece in Swarajyamag

To be sure the early days of the Modi government were filled with stories of change in the bureacracy – longer working hours, shorter decision making timelines. More recently, reports suggest a couple of senior IAS officers were compulsorily retired on account of poor performance. But the changes seem incremental.

Doval insists there is a “huge change in the way Delhi used to work”.

What happens is before you can bring about structural changes, you have to create an environment, you got to create the right narrative, the right consensus in a democracy, and create a situation where this changes, incrementally as they may, start happening and will find place. Ability to bring about talent. The first time, if you talk to most bureaucrats in Delhi they will tell you that selection of officers, of people getting posted into Delhi, is not being done on the basis of who you know, but based on objectivity.
Officers being brought from various states, and getting posted into various ministries in Delhi, are being given a certain tenure in various positions based on merit, calibre, their honesty, as against just being able to fix your appointments. Nobody can fix a job in Delhi today. That is a huge change in the way Delhi used to work.  Now, these soft changes are very important to create an environment in which more structural changes can be brought about.

Doval is confident that “our bureaucracy will move towards a smaller, leaner, more technological savvy, less human intervention bureaucracy over time if the political class and the bureaucratic class are also co-opted. It will not happen without their support. What will not happen is the slicing and dicing and big changes...”

Modi’s Misses

Doval lists two.

The lack of speed in resolving India’s bad loan or non-performing asset (NPA) problem

I think one thing we could have done better is that we could have moved faster on this whole NPA issue. We did the bankruptcy code, we put a lot of architecture in place that would allow this to be a much more softer landing. But our ability to not address this issue has had some impact on our economic growth, particularly on investment in the private sector.

We did suffer because of that, so I think that was one area where if the government focused more on it or acted swiftly on it then, I don’t know if we could have completely eliminated the intertime, but I think we could have truncated the three years. But I am hoping that this is something they will continue to work on and very quickly because this should actually have been done as of yesterday.

Generation of Jobs

I think it’s not just the government. The government should try and work to create a greater sense of urgency across the country and this should be more of a national mission.

Doval’s comments have been lightly edited for ease of reading.

This interview was conducted at the IDFC Institute Dialogues 2017.

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